ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Con Conver er ergence ence of Incomes acr across oss Indian Sta States tes

This article examines the trends in interstate inequalities in the levels of income in India over the last three and a half decades. Contrary to the predictions of neoclassical growth theory that interstate differences in income levels tend to reduce as they approach the steady state equilibrium, our analysis shows widening interstate disparities. To understand the causes of this divergence, the article examines the determinants of interstate differences in growth rates and analyses the role of interstate transfers - explicit and invisible - in determining the geographical spread of investment and incomes. It finds that divergence in income levels has been mainly caused by the allocation of private investments which in turn, has been influenced by the inequitable spread of infrastructure. The inequitable nature of public expenditure spread across states is attributed to the inability of the intergovernmental transfer mechanism to adequately offset the fiscal disabilities of the poorer states as well as regressive nature of the invisible interstate transfers.

Public Sector Enterprises in India-Is Privatisation the Only Answer

Public Sector Enterprises in India Is Privatisation the Only Answer? K P Kalirajan R T Shand Privatisation is a major theme in public sector reform. This article argues on the basis of empirical evidence that improving the performance of public enterprises is an alternative measure where privatisation is a difficult policy option to implement in the short term. A bench-mark for measuring productive performance of public enterprises has been evolved and applied to measure productive performance and production behaviour.

World Bank on Fiscal Adjustment in India

World Bank on Fiscal Adjustment in India M Govinda Rao R T Shand K P Kalirajan The World Bank's Country Economic Memorandum (CEM) on India this year reviews the progress of fiscal reforms at central and state levels. However, like in the past, the emphasis on reducing fiscal deficits rather than increasing public savings robs the analysis much of the relevance. Also, its assertion that there is no further scope for expenditure compression and additional deficit reduction should be achieved by increasing taxes is not based on sound empirical analysis. In fact, such a recommendation may signal a spate of spending on populist schemes as has been seen recently. Similarly, attributing fiscal problems at the state level to inadequate revenue efforts is not based on facts. This can not only encourage profligacy, but also may introduce additional sources of inefficiency.
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